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Forex: Euro Looks to PMI, GDP Data to Set Stage for ECB Meeting

Forex: Euro Looks to PMI, GDP Data to Set Stage for ECB Meeting

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Euro May Fall if Soft PMI, GDP Data Stoke ECB Easing Speculation
  • Australian Dollar Falls as 3Q GDP Disappoints, Kiwi Dollar Follows
  • US Dollar Eyes ISM Data, Beige Book to Shape Fed QE “Taper” Bets

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All eyes are on the Euro as a round of critical economic releases sets the stage for the ECB monetary policy announcement later in the week. First, the final revision of November’s Eurozone Composite PMI is expected to confirm manufacturing- and service-sector growth slowed for a second consecutive month, yielding the weakest performance since August. Next, a second look at third-quarter Eurozone GDP is forecast to maintain that output grew 0.1 percent, a slowdown compared with the 0.3 percent increase recorded in the three months through June. Soft outcomes are likely to stoke speculation about further easing after last month’s unexpected ECB rate cut, weighing on the single currency.

Later in the day, the spotlight turns to the US economic calendar. November’s ISM Non-Manufacturing Composite gauge and the ADP Employment measure for the same period are on tap. The former is expected to show a slight slowdown in service-sector activity while the latter suggests private-sector hiring accelerated from the prior month. The Federal Reserve Beige Book survey of regional economic conditions is likewise due to be released. On balance, traders will look to the aggregate tone of these releases to shape speculation about the timing of the Fed’s first move to “taper” QE3 asset purchases, with a broadly positive tone likely to boost the US Dollar (and vice versa).

The Australian Dollar underperformed in overnight trade, falling as much as 1 percent on average against its leading counterparts, following a disappointing set of third-quarter GDP figures. Output grew 0.6 percent from the prior quarter, falling short of forecasts calling for a 0.7 percent increase. The year-on-year growth rate slowed to 2.3 percent, undershooting economists’ bets on a 2.6% result. The outcome weighed against the outlook for RBA monetary policy, fueling speculation about the resumption of interest rate cuts. The New Zealand Dollar followed its Australian namesake lower as a slowdown in the island nation’s top trading partner threatened local export demand, which may reduce scope for RBNZ tightening next year.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Value of All Buildings s.a. (QoQ) (3Q)

1.4%

4.8%

-0.6%

22:30

AUD

AiG Performance of Service Index (NOV)

48.9

-

47.9

0:01

GBP

BRC Shop Price Index (YoY) (NOV)

-0.3%

-

-0.5%

0:30

AUD

GDP (QoQ) (3Q)

0.6%

0.7%

0.7%

0:30

AUD

GDP (YoY) (3Q)

2.3%

2.6%

2.4%

1:45

CNY

HSBC/Markit Services PMI (NOV)

52.5

-

52.6

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

8:15

CHF

Industrial Output (YoY) (3Q)

0.7% (A)

-1.1%

Low

8:45

EUR

Italian PMI Services (NOV)

50.4

50.5

Low

8:50

EUR

French PMI Services (NOV F)

48.8

48.8

Low

8:55

EUR

German PMI Services (NOV F)

54.5

54.5

Medium

9:00

EUR

Eurozone PMI Services (NOV F)

50.9

50.9

Medium

9:00

EUR

Eurozone PMI Composite (NOV F)

51.5

51.5

Medium

9:30

GBP

PMI Services (NOV)

62.0

62.5

Medium

9:30

GBP

Official Reserves (Changes) (NOV)

-

-$208M

Low

10:00

EUR

Eurozone GDP s.a. (QoQ) (3Q P)

0.1%

0.1%

High

10:00

EUR

Eurozone GDP s.a. (YoY) (3Q P)

-0.4%

-0.4%

High

10:00

EUR

Eurozone Household Consumption (QoQ) (3Q P)

0.1%

0.1%

Low

10:00

EUR

Eurozone Gross Fixed Capital (QoQ) (3Q P)

0.2%

0.2%

Low

10:00

EUR

Eurozone Government Expenditure (QoQ) (3Q P)

0.1%

0.4%

Low

10:00

EUR

Eurozone Retail Sales (MoM) (OCT)

0.1%

-0.6%

Medium

10:00

EUR

Eurozone Retail Sales (YoY) (OCT)

1.0%

0.3%

Medium

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.3395

1.3485

1.3537

1.3575

1.3627

1.3665

1.3755

GBPUSD

1.6212

1.6302

1.6346

1.6392

1.6436

1.6482

1.6572

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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